Real Estate Matters by John Baer, SRES
Westchester County has seen large numbers of buyers looking for homes in the last number of months. Currently, there are many fewer homes in the $500,000-$1 million price range than there are serious buyers ready, willing, and able to purchase them. This is called a sellers’ market. And that means many homebuyers are likely to find themselves in a bidding war.
In Scarsdale, where I am presently helping a number of clients find homes, homes under $1 million often sell within three or four days. The home buyer searches and thinks he or she has found a winner. The buyer and agent construct the perfect negotiation strategy, and submit an offer, ready to get the deal of a lifetime.
Then the buyer gets a call only to hear the crushing news that more buyers are hearing these days: “We have received multiple offers. Please submit your highest and best offer by tomorrow at 5 PM.” So, now what? A good listing agent won’t tell you much about the other offer. It could be $20,000 less than yours or $20,000 higher. There could be one other offer or a dozen. The buyer is going to have to put his or her best foot forward. Here are several tips to help you fight for your new home:
Remember: it’s not all about money
Sometimes it is about timing. Pick a closing date advantageous to the sellers. Can you close quickly, saving the sellers money? Or can you close later, giving them time to find a new home? Find out what matters to them.
A brief (five days or less) attorney review and inspection period. This will minimize the amount of market time a seller could potentially lose if you were to back out of the contract as a result of something found during the inspection. It will also give the seller more time to confidently search for a new home.
Important: This requires you to have your act together. Who is your inspector? Who is your attorney? Call both of them before you put the contract in so you still have time to do your due diligence. Finally, make a large earnest money deposit - say 5% to 10% of price - to show the sellers you’re serious. They know a buyer with some skin in the game is less likely to jerk them around and then bail on a contract.
Make the seller like you
An offer with a well-written cover letter stands out, and it never hurts to try to relate to a seller. Are you truly in love with their home? If so, tell them why. Do you truly love the neighborhood? If so, tell them why. Do you plan to treat the home with loving care? If so, let them know that. Agents often fire off contracts with no cover letter and little presentation. This gives the impression that their clients aren’t as committed to buying the property, and many listing agents are likely to convey that to a seller.
Make sure that your cover letter emphasizes how thoroughly your lender has pre-qualified you. Together with your offer and your cover letter you should also submit a letter from a lender confirming that you are thoroughly pre-qualified. Sellers should get the impression that you are a buyer with no potential financing issues who is committed to buying their property.
Don’t request favors
This is not the time to ask the seller to give you items on their exclusion list, or to make cosmetic upgrades to the home.
Pay what the property is worth to you
This one should go without saying, but sometimes buyers get caught up in the emotions of the process. Overpaying for a property isn’t winning, and neither is stubbornly sticking to a lowball offer. Have your agent put together a detailed comparative market analysis to determine the fair market value of the property. From there, it is okay to pay a touch more if you really love the place, especially if you’ve been looking for a while. But keep in mind, the property will need to appraise for this price if you’re getting financing. And it’s okay to bid a bit less if you feel you have other strong options.
Within the last few weeks I took a buyer to see four homes in the Edgewood section of Scarsdale. In all cases each of these homes sold within less than a week, each received multiple offers, and each sold over their respective listing price. That’s the residential housing market for homes under $1 million in Scarsdale now.
My final word of advice: “buyer be ready.” Get all your homework done before you make that offer. If you want to survive in this sellers’ market, you have to be ready.
John E. Baer, SRES, DPA is a NYS licensed real estate salesperson associated with Prudential Centennial Realty of Scarsdale and Larchmont. He can be reached for questions at 914/600-6086 or at 914/844-2059. His website is www.WestchesterHomes.info.